Obama may consider extension of all Bush tax cuts

The White House continues to send out signals that it will consider an extension of all the George W. Bush tax cuts -- including ones for the wealthy, perhaps on a temporary basis.

White House adviser David Axelrod told The Huffington Post that extending all the cuts would at least benefit the middle class, and that the Obama administration must deal with newly emboldened Republicans who won last week's elections.

"We have to deal with the world as we find it," Axelrod said. "The world of what it takes to get this done."

(White House officials warn that the HuffPo headline -- "White House gives in on Bush tax cuts" -- is overdrawn; no decisions have been made. Obama sits down next week with Republican and Democratic congressional leaders, and tax cut extensions are high on the agenda.)

And Axelrod also told The National Journal: "We're willing to discuss how we move forward, but we believe that it's imperative to extend the tax cuts for the middle class, and don't believe we can afford a permanent extension of tax cuts for the wealthy."

Note the word "permanent." One potential compromise: A temporary extension of the high-end tax rates.

Obama supports extending the cuts for most Americans, but not for those who make more than $200,000 a year and couples making more than $250,000. He makes a deficit argument, saying an extension of tax cuts for the rich would cost the government $700 billion.

But the president has also signaled he is open to compromise, telling CBS' 60 Minutes recently:

I understand the Republicans have a different view. And so we are going to have to have a negotiation, and I am open to, you know, finding a way in which, you know, they can meet their principles and I can meet mine. But in order to do that, I think we do have to answer the question of how we pay for it.

Republicans, including incoming House Speaker John Boehner, R-Ohio, say no one's taxes should be raised in a bad economy, and that many wealthy people are also the ones who create jobs. They are pushing for permanent extensions.

They also noted that tax cuts Bush signed into law are due to expire Jan. 1, and that extending them is the work of the lame duck Congress that includes outgoing House Speaker Nancy Pelosi, D-Calif.

"We're glad to see that the president's most trusted adviser now agrees with this course of action, and hope he and the president will show leadership by convincing Speaker Pelosi to stop these tax hikes permanently in the upcoming lame duck session," said Boehner spokesman Michael Steel.

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About David Jackson

David's journalism career spans three decades, including coverage of five presidential elections, the Oklahoma City bombing, the 2000 Florida presidential recount and the 9/11 terrorist attacks. He has covered the White House for USA TODAY since 2005. His interests include history, politics, books, movies and college football -- not necessarily in that order. More about David